Behind the weak rhetoric of 'responsible capitalism'

Behind the weak rhetoric of 'responsible capitalism'

By Jonathan Bartley

21 Jan 2012

While David Cameron and Ed Miliband continue to support relentless growth and minor amendments to the economic system, the inequalities inherent in that system will prosper, says Jonathan Bartley. A more thoroughgoing critique and real alternatives are needed.

The "responsible capitalism" that David Cameron and Ed Miliband have advocated is a reheated and repackaged religious idea that threatens to distract, and conceivably scupper, the more fundamental economic reform that is required.

Those who were around Westminster in the late 1980s and early 90s will remember the push by the Institute of Economic Affairs around morality and markets. The work of people such as the American Catholic Michael Novak and the Conservative Christian Brian Griffiths (now Lord Griffiths) who was part of Margaret Thatcher's Number 10 Policy Unit, was published and promoted. They argued that capitalism was the best system on offer but had drifted too far from its moral moorings. Put the morality back into markets, and everything will be OK .

A "nicer" capitalism is also something that sections of the church have been pursuing. The report Prosperity With a Purpose, produced in 2005 by Churches Together in Britain and Ireland, marked the church's clear departure from its Faith in the City report of the mid 80s. Prosperity With a Purpose embraced the pursuit of wealth, rather than thinking creatively about economic alternatives. It is not surprising, therefore, that responsible capitalism is the model being pursued by St Paul's Cathedral in the wake of the Occupy movement, too. Ken Costa, the investment banker behind the Evangelical Alpha course and an active Tory in the 1990s, has been appointed to head an initiative "reconnecting the financial and the ethical".

But read what Costa said in a speech at Mansion House just a few days before his appointment: "I certainly don't believe the economic system we have is broken, let alone irredeemably broken.

"Anyone familiar with banking and finance will know that it is completely impossible to legislate out bad practice.

"Diversity makes it difficult to respond to them [the protesters] and we may well choose to ignore this particular protest. But … astute business people always need to be ahead of the curve, and this is no exception. Challenging as it may be to us, we need to listen, think and then head off the arguments before they get wider traction."

He doesn't think the system needs changing. He doesn't think it really can change (unless everyone is a bit nicer and more moral). But, most significantly, he urges that the real reformers be outmanoeuvred.

Responsible capitalism provides the framework to do exactly that. If gives the appearance of change without producing the reform that Costa fears, and that the leaders of the Conservative and Labour parties refuse to pursue.

Like the churches, the Prime Minister and Miliband will talk about poverty and the high pay that underperforming chief executives and bankers do not "deserve", but there will be no debate about the inequality on which the system depends to function and survive. There will be no facing up to the reality that relentless – and largely illusory – growth, based on credit, is unsustainable. They will not acknowledge that inflation driven by rising commodity prices, following the depletion of scarce resources, has made a monkey out of monetarism. And this in addition to the huge human, social and environmental cost – which we have yet to pay in full.

Responsible capitalism is an oxymoron akin to "well-mannered war" or "friendly famine". But to begin to acknowledge that, the values of the system itself must be questioned not just the ethical or regulatory framework in which it operates.